A rough answer is more than 1.5%-2% of their fund size is a “lot of money” for most professional investors. 2% is a pretty standard target for most core VC investments, and more than that starts to become risky. And 5% or more of the fund into 1 deal starts to become a “this investment has to work or I might lose my job” investment.

So take say, a $150m venture fund:

  • A $250k or $500k investment out of $150m fund is immaterial (0.1%-0.3%). It can generally be done quickly with limited diligence.
  • A $2m-$4m investment is the sweet spot. That’s 1.5%-2.5% of the fund. Enough to move the needle, but not so much it can’t be written off.
  • A $7m-$8m+ investment can work if there is “high conviction” in the investment, but is stressful, and most VCs would prefer to get there over 2 rounds. That’s 5%+ of the fund, so deferring some of the investment until the next round can offset some risk.
  • Anything more than this is super risky and rare for a VC fund.

Do this quick math to know where you stand with a VC.

(note: an updated SaaStr Classic answer)

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